In today’s increasingly globalised world, we are more connected with foreign countries than ever before. The internet has made it simple to trade internationally, resulting in many Australians making overseas investments and purchasing foreign assets.
For people who own assets held outside Australia, or who may have a potential interest in foreign assets due to their involvement in a marriage or de facto relationship, a common concern is whether overseas assets are factored into property settlements during the course of a divorce or separation.
Here, we explain how overseas property is treated during the course of a property settlement in Australia.
How do Courts determine Property to be Settled during a Separation?
Upon the breakdown of a relationship, the process of a property settlement in Australia determines who gets what when it comes to assets owned by each party.
The first step of this process is identifying a ‘property pool’, which is made up of assets, liabilities and superannuation owned by both members of the separating couple. Once this pool has been determined, the Court will assess the contributions to the asset pool by each partner, as well as the future needs of both parties, and divide the property on a case-by-case basis.
When it comes to determining what should be included in the property pool, Courts look to the Family Law Act (1975) which provides the following definition of ‘property’:
(a) in relation to the parties to a marriage or either of them–means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or
(b) in relation to the parties to a de facto relationship or either of them–means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
This is a broad definition of property, which can include almost anything of value. Assets such as real estate, shares, cars, jewellery, savings and furniture can all be included in the property pool.
If you are involved in a property settlement in Australia, the Family Law Act demands that you must provide full and frank disclosure to your partner and the Court of all relevant assets, liabilities and financial resources. This also includes overseas property, regardless of where the property is located overseas or what type of property it is. Failure to accurately disclose information about overseas property will result in serious consequences.
How are Overseas Assets Evaluated in the Course of a Property Settlement in Australia?
As mentioned above, property held overseas will typically still be taken into account and valued as part of a property settlement in Australia. This is because overseas property falls under the Family Law Act’s broad definition of property.
The Australian Family Courts have jurisdiction to make orders concerning international assets by virtue of section 31(2) of the Family Law Act which states the jurisdiction of the courts “may be exercised in relation to persons or things outside Australia and the territories”.
Foreign assets in a property pool may include overseas properties, money held in international accounts, international shareholdings and overseas pensions.
Once you have fully disclosed all overseas property, the court may decide to make an order adjusting the property interests of the parties to take the foreign assets into account, without necessarily exercising jurisdiction over the foreign assets. This is due to the complexities involved with enforcing court orders overseas.
Can the Family Court Enforce an Order regarding Overseas Property?
Enforcement of an Australian court order regarding overseas property is a complicated and situational area for courts to navigate. Property settlement orders made by Australian Family Courts may not be recognised or enforceable in the overseas jurisdiction, which can lead to problems in actually enforcing the order.
The Family Court of Australia’s powers are personam in nature, meaning that the court can provide orders which require an individual to deal with overseas property in a certain way, but cannot directly compel or secure the outcome themselves.
If an overseas jurisdiction recognises an order or decree by an Australian court, they will enforce it as if it had been made in their country. However, the likelihood of this depends on the jurisdiction in question, and it is ultimately their decision as to whether they recognise and enforce an Australian judgement against the property or asset.
Because of this, the Australian court may make the following considerations when determining how to deal with overseas property as part of a property settlement in Australia:
- Whether the foreign court will recognise the Australian orders
- The costs incurred throughout the process
- The parties’ connections to either jurisdiction
Due to potential difficulties navigating foreign jurisdiction, it is typically simpler for the court and parties to avoid a court order concerning the property and instead deal with disclosed foreign assets by accurately assessing their ownership and value and then treating them as a financial resource, the worth of which will be factored into the property evaluation.
When embarking on a property settlement in Australia which involves overseas property, you should engage a lawyer who will be able to help you navigate the jurisdictional complexities which may be involved.
Need Expert Advice about Overseas Assets in a Property Settlement in Australia?
If you have recently separated from your spouse or de facto partner and you have questions concerning how overseas assets might be factored into a property settlement, or you are already involved in a property settlement in Australia, it is important that you seek legal advice immediately.
Our lawyers are experienced with family law matters, and will be able to assist you with achieving your desired outcome when it comes to the division of property in your property settlement. Please contact us to see how we can help.